Speaker 1: Welcome to Tech Stuff, a production from iHeartRadio. Hey thereon
Speaker 1: Welcome to Tech Stuff. I'm your host, Jonathan Strickland. I'm
Speaker 1: an executive producer with iHeartRadio and how the tech are
Speaker 1: you so. A decade ago, an investor named Aileen Lee,
Speaker 1: the founder of a venture capital firm called Cowboy Ventures, which,
Speaker 1: like crap, that's a great name. She coined the term
Speaker 1: unicorn to describe a startup that has reached the unbelievable
Speaker 1: milestone of a billion dollar valuation, and since then, tech
Speaker 1: boffins have used the term unicorn to single out startups
Speaker 1: that stand out from among the crowd. Every startup founder
Speaker 1: is hoping for a unicorn. In fact, every investor is
Speaker 1: hoping that they get in on the ground floor of
Speaker 1: supporting a unicorn. The end goal for most investors is
Speaker 1: to sink a decent investment in a startup, see that
Speaker 1: startup climb and valuation to astronomical heights, and then rake
Speaker 1: in the wealth when that company inevitably goes public. That's
Speaker 1: the dream scenario. You see this huge return on your investment.
Speaker 1: In fact, there are venture capital firms that really count
Speaker 1: on a few of the companies they pick reaching a
Speaker 1: level of unicorn status because it pretty much carries the
Speaker 1: entire company. It'll help carry and balance out all the
Speaker 1: ones that didn't really reach those levels. What's interesting to
Speaker 1: me is that there's no point in this journey toward
Speaker 1: billion dollar valuation where a startup actually needs to make
Speaker 1: a profit. Startups can reach a billion dollar valuation without
Speaker 1: making a profit. They could potentially make it without even
Speaker 1: having a plan to reach profitability, although that's less likely.
Speaker 1: Typically they will be at a point where they're generating revenue,
Speaker 1: but they're not making more than what they're spending, so
Speaker 1: they're still operating at a loss. So as an example
Speaker 1: of this, I'll give you a unicorn example. The former
Speaker 1: Twitter now X originally reached a billion dollar valuation back
Speaker 1: in two thousand and nine, but Twitter didn't turn an
Speaker 1: annual profit until two thousand and eighteen. Nine years later,
Speaker 1: it was worth a billion dollars but had not yet
Speaker 1: made an annual profit. It did make a quarterly profit
Speaker 1: a couple of times before twenty eighteen, but the first
Speaker 1: time it made a profit at the end of a
Speaker 1: year was twenty eighteen. Crazy, So profits are not really
Speaker 1: a necessity when it comes to achieving unicorn status. It's
Speaker 1: certainly not a necessity for making a boatload of money
Speaker 1: off of a company. Now, that was not always the case, right.
Speaker 1: Once upon a time, investors were much fewer and further between.
Speaker 1: It was harder to get hold of investment capital. So
Speaker 1: for a business to really survive, it had to make
Speaker 1: a profit, or at the very least, it had to
Speaker 1: break even. Otherwise there was no way to cover the
Speaker 1: costs of operation, and you would you run yourself out
Speaker 1: of business. It'd be too expensive to run the business
Speaker 1: to stay in business, and any hope of becoming an
Speaker 1: enormous success really hinged upon being profitable. But let's put
Speaker 1: that aside for a little bit. Let's get back to
Speaker 1: talking about unicorns. So in twenty thirteen, Aileenlye writes a
Speaker 1: piece titled Welcome to the Unicorn Club. Learning from billion
Speaker 1: dollar Startups, and Lee called these billion dollars startups unicorns
Speaker 1: because of their rarity. They were so incredibly rare. According
Speaker 1: to her company's research, out of the thousands of companies
Speaker 1: that had been launched in the previous decade from two
Speaker 1: thousand and three to twenty thirteen, only point zero seven
Speaker 1: percent of them reached a billion dollar valuation. I want
Speaker 1: to say it was like thirty nine companies at the time.
Speaker 1: So that raises a question, what exactly is valuation? How
Speaker 1: do analysts determine or really, if we want to be accurate,
Speaker 1: how do they estimate the value of a startup, especially
Speaker 1: a startup that may not have a product to sell. Now,
Speaker 1: with publicly traded companies, one way to measure value is
Speaker 1: through market capitalization. This is a pretty simple concept, really,
Speaker 1: So publicly traded companies have shares. Right, you can purchase
Speaker 1: a share in the company. Each share is worth a
Speaker 1: certain amount, and that amount is determined by the market. Now,
Speaker 1: going into all the different forces that play into the
Speaker 1: the share value of a company would go well beyond
Speaker 1: my meager ability to explain. If I could explain all
Speaker 1: of that in great detail, I would be in a
Speaker 1: different tax bracket. But essentially, for market capitalization, you take
Speaker 1: the number of shares that are outstanding the ones that exist,
Speaker 1: in other words, and you multiply that number of shares
Speaker 1: by the value per share. Then you get the market
Speaker 1: capitalization of a company. So we'll use an overly simplified
Speaker 1: hypothetical example. Let's say we've got a company and we're
Speaker 1: calling it Willie's Widget Wonderland. It's a publicly traded company,
Speaker 1: and the shares for Willy's Widget Wonderland are trading at
Speaker 1: ten dollars per share. So for ten American dollars, you
Speaker 1: can buy yourself a single share in this company. Let's
Speaker 1: also say that there are only one hundred thousand shares
Speaker 1: of this company at all, that's all that exists. Well,
Speaker 1: we would then multiply these two numbers together, right, ten
Speaker 1: dollars per share, one hundred thousand shares. That gives us
Speaker 1: a million dollars. Boom, that's the market cap for Willie's
Speaker 1: Widget Wonderland. Now, like valuation, market cap doesn't rely on
Speaker 1: stuff like profit or revenue, at least not directly. Those
Speaker 1: factors can play into the value of the company by
Speaker 1: affecting the company's stock value, and that in turn does
Speaker 1: affect market capitalization. So market cap tells us what the market,
Speaker 1: the stock market in this case, values a company at.
Speaker 1: Often investors will reference marketcap as the size of the company. Now, technically,
Speaker 1: market cap doesn't indicate if a company is, you know,
Speaker 1: physically larger or smaller than any other company, but rather
Speaker 1: the size of its value in the marketplace. However, typically
Speaker 1: larger cap companies are more established, and usually that means
Speaker 1: they are also more stable than companies that have a
Speaker 1: smaller market cap. But you know, to talk about the
Speaker 1: value of a company beyond just the measure of market cap,
Speaker 1: you have to talk about all sorts of other stuff,
Speaker 1: like you might have to take into account how much
Speaker 1: revenue the business generates, what are its costs of operation,
Speaker 1: how much does it pay in taxes? You know, how
Speaker 1: much of the business has depreciated over time, and by
Speaker 1: how much. This kind of gets us into the dreaded
Speaker 1: EBITDA or EBITA as I've heard it said that actually
Speaker 1: it's eb I t DA. It stands for earnings before interest, taxes,
Speaker 1: depreciation and amortization, And y'all, I have been in meetings
Speaker 1: where EBEDA is part of the discussion, and every time
Speaker 1: it happens, I can feel my eyes start to glaze over.
Speaker 1: I will say that there are critics who have argued
Speaker 1: that EBEDA has been misused, that companies have leaned on
Speaker 1: EBEDA to perhaps overstate their profitability because it does take
Speaker 1: a lot of costs out of that equation, and that
Speaker 1: it's really just a way for companies to make it
Speaker 1: seem like they're doing a lot better than perhaps how
Speaker 1: they are really doing once you take all of these
Speaker 1: different factors into consideration. But to get into it further
Speaker 1: would mean we'd need to find another host because I
Speaker 1: would fall asleep. And anyway, we're not really talking about
Speaker 1: publicly traded companies, are we We're talking startups. So a
Speaker 1: startup typically is a privately held company, a corporation. It
Speaker 1: usually has the goal of becoming a publicly traded company
Speaker 1: at some point in the future. It's not necessarily its goal,
Speaker 1: but often that is the understanding among both the startup
Speaker 1: itself and its investors. So how the heck do you
Speaker 1: assign value to an entity like that. It's not a
Speaker 1: business that's established, that has a history, that has actual
Speaker 1: spreadsheet showing things like costs versus revenue. How do you
Speaker 1: put a value on a startup that, perhaps in its
Speaker 1: earliest stage, is very little more than just a good idea,
Speaker 1: or hopefully a good idea. And that's a really good question.
Speaker 1: So let's imagine that we have a brand new startup
Speaker 1: and the founders have, you know, an interesting idea, but
Speaker 1: at the start, they don't actually have a product to sell.
Speaker 1: There's no operating income for the business. Maybe they've got
Speaker 1: a company structure, like maybe they've designated officers for the
Speaker 1: business who are in charge of specific functions, but as
Speaker 1: of right now, they're not yet producing something that they
Speaker 1: can sell. How do you place a value on that
Speaker 1: kind of operation? But hold on, it gets even more
Speaker 1: complicated than that. Let's say that this startup is a
Speaker 1: really new idea, like it's really innovative, something that hasn't
Speaker 1: seen much or perhaps any representation in the market as
Speaker 1: of right now. Now, well, that makes it even harder
Speaker 1: because it means you have very little you can compare
Speaker 1: that startup against in the market, So that becomes a
Speaker 1: barrier to valuation. You can't say, oh, well, this other
Speaker 1: company is valued at such and such, so that's probably
Speaker 1: the ballpark where we need to look at for this
Speaker 1: other startup. If the two startups are nothing alike, then
Speaker 1: there's no reason to port over that value from company
Speaker 1: A to company B. On top of that, the market
Speaker 1: changes quickly, which makes it really hard to predict how
Speaker 1: the startup is going to perform in the future. So
Speaker 1: will the market continue to support this startups business model
Speaker 1: and thus lead to enormous growth, which is what all
Speaker 1: the parties involved want to see. Or will the market
Speaker 1: itself change and thus the business model then becomes irrelevant.
Speaker 1: It's not that the business model was bad, it's just
Speaker 1: it no longer applies because the market itself has changed.
Speaker 1: Or will it turn out that the market demand for
Speaker 1: the company's product just isn't there, like you think it's
Speaker 1: there because it sounds like a great idea, but once
Speaker 1: you actually get it out there, no one really seems
Speaker 1: jazzed about it. Here this reminds me kind of of
Speaker 1: how I see the metaverse right now. Obviously, the metaverse
Speaker 1: itself is not a startup, but the fact that I
Speaker 1: often see a lack of enthusiasm in the general public
Speaker 1: around the concept of the metaverse makes me question the
Speaker 1: wisdom of investing billions of dollars into that idea. So
Speaker 1: the truth of the matter is that lots of factors,
Speaker 1: some of them subjective ones, will come into play to
Speaker 1: determine a startup's value, and they can include things like
Speaker 1: investor opinions. If investors are enthusiastic about a startup, that
Speaker 1: startups valuation typically goes up. But other stuff involves things
Speaker 1: like market trends or assumptions about the market in general.
Speaker 1: So it gets very whibly wobbly. We're going to take
Speaker 1: a quick break. When we come back, I'm going to
Speaker 1: talk about some approaches toward assigning value to startups. Okay,
Speaker 1: we're back. So, as I mentioned, there are a couple
Speaker 1: of different ways that investors will attempt to assign value
Speaker 1: to a startup, which will ultimately determine whether a startup
Speaker 1: reaches Unicorn status. One of those ways is called the
Speaker 1: market multiple approach. So broadly speaking, this method takes a
Speaker 1: look at recent acquisitions in whatever sector the startup is in.
Speaker 1: So if the startup is at all similar to other
Speaker 1: businesses that are part of these acquisitions, this is a
Speaker 1: good approach, or at least a viable one. So what
Speaker 1: you do is you look at the acquisitions that have
Speaker 1: been made. You also take a look at how much
Speaker 1: those businesses, those startups that got acquired, how much were
Speaker 1: they making in sales or how much sales were they
Speaker 1: actually seeing at the time of acquisition, And then how
Speaker 1: much of a multiplayer is there for the amount of
Speaker 1: sales versus the amount that was paid for at acquisition.
Speaker 1: That gives you your market multiple. So let's talk about
Speaker 1: our fictional widget company again. Let's imagine the widget company
Speaker 1: is not publicly traded, it's a startup. And let's say
Speaker 1: that investors look at how much other companies are paying
Speaker 1: to acquire hardware companies that are in some way similar
Speaker 1: to this widget company, and it turns out the acquisition
Speaker 1: price is about six times greater than the actual sales
Speaker 1: that these companies are making. That that's the average that
Speaker 1: you're seeing across these acquisitions six times more. So your
Speaker 1: market multiple is six and you can use that multiple
Speaker 1: to kind of estimate your own company's valuation, though obviously
Speaker 1: you're going to have to tweak that depending upon the
Speaker 1: status of your own startup. So for example, if you
Speaker 1: haven't really built out manufacturing facilities yet and you don't
Speaker 1: actually have anything to sell, well, you can't really multiply anything.
Speaker 1: If you're at very low scale then and maybe your
Speaker 1: multiple is much lower because you haven't proven that you
Speaker 1: can scale the business up yet, and that means that
Speaker 1: investors are taking on a greater amount of risk when
Speaker 1: they invest in your company. So your multiple ends up
Speaker 1: being smaller than the market six times multiple that you're
Speaker 1: seeing elsewhere. But this can be a way to kind
Speaker 1: of guide you toward valuation. Obviously, the big hurdle here
Speaker 1: is that the market multiple approach is dependent upon finding
Speaker 1: comparable businesses in the market that have been acquired. If
Speaker 1: your startup is really innovative and really doesn't resemble other
Speaker 1: stuff that's already on the market, then you don't have
Speaker 1: anything to compare it against. You don't have any way
Speaker 1: to derive the multiple in the first place, because there's
Speaker 1: no one else out there that's like you. So you
Speaker 1: can't depend upon what's happening in other parts of the
Speaker 1: market because it may not have any application toward your situation. However,
Speaker 1: there are other means to assign valuation. So another is
Speaker 1: called the cost to duplicate. This is pretty self explanatory.
Speaker 1: How much money would it take to build a duplicate
Speaker 1: copy of the startup in question. Now, actually coming up
Speaker 1: with that figure can be a little tricky because it
Speaker 1: can involve stuff that's a little more ephemeral than just
Speaker 1: how much do the facilities cost? How much is the
Speaker 1: business paying its staff, like how much is not just
Speaker 1: rent but the cost of operations. It can actually include
Speaker 1: other stuff too, like intellectual property that becomes harder to
Speaker 1: put an actual, like monetary value to and that gets
Speaker 1: a bit wishy washy, or things like the value of
Speaker 1: research and development that's going on within the startup. How
Speaker 1: do you put a monetary value on that. So the
Speaker 1: cost to duplicate has a pretty big drawback. It gives
Speaker 1: a snapshot of a company's current value, but it doesn't
Speaker 1: necessarily take all of its assets into account because not
Speaker 1: all of them are so easily reduced to a figure,
Speaker 1: and it cannot bring into account the potential for the
Speaker 1: company's success. Right It's looking at a snapshot of why
Speaker 1: it's valued right now, but it's not telling you what
Speaker 1: will it be valued six months from now, assuming that
Speaker 1: everything's working well. So there are assets that just might
Speaker 1: not be quantifiable, but they are still valuable to the organization,
Speaker 1: but they're not going to show up on a spreadsheet
Speaker 1: because he can't reduce it down to that data point.
Speaker 1: For that reason, the cost to duplicate method can undervalue
Speaker 1: a startup, sometimes by a significant amount. So you could say, like,
Speaker 1: all right, well this is the low ball range of
Speaker 1: the company's valuation. That would be a safer thing to say,
Speaker 1: because you are acknowledging that this cost to duplicate method
Speaker 1: does not take all assets into account because it just
Speaker 1: it's not designed to be able to do that. Next up,
Speaker 1: we've got the discounted cash flow method, or DCF method,
Speaker 1: and in some ways it's kind of the opposite of
Speaker 1: the cost to duplicate approach, because it's all about looking
Speaker 1: forward as opposed to getting a snapshot of current value.
Speaker 1: The DCF method requires analysts to predict how much cash
Speaker 1: flow a startup will have in the future, and then
Speaker 1: also bring into account the expected return on investment that
Speaker 1: the startup is going to create, and putting those together
Speaker 1: tells you how much that cash flow itself is worth,
Speaker 1: and that ends up allowing you to place a valuation
Speaker 1: on the company. To me this method comes across a
Speaker 1: lot like telling fortunes. You're making the best guess you
Speaker 1: can based upon the information that's currently available, but knowing
Speaker 1: how things can change quickly means that at some level
Speaker 1: you really have to acknowledge that this approach is far
Speaker 1: from bulletproof. The last method can sometimes feel the most
Speaker 1: arbitrary of them all. It's called the valuation by stage method,
Speaker 1: So this method assigns value based upon how far along
Speaker 1: the startup is as it develops to become a real boy. Wait,
Speaker 1: I'm sorry, No, I'm sorry, that's pinocchio. I mean when
Speaker 1: the startup is becoming, you know, its own standalone, real
Speaker 1: company that can exist without regular injections of investment cash. Obviously,
Speaker 1: the earlier the startup is on the journey, the lower
Speaker 1: its valuation is going to be. And only if the
Speaker 1: startup is able to hold together and continue to develop
Speaker 1: and reach certain milestones like finding the right leadership team
Speaker 1: that's a milestone, or forming strong allegiances in partnerships with
Speaker 1: other companies that's another milestone. Hitting these milestones tells the
Speaker 1: investor community, Oh, you have reached the next kind of
Speaker 1: level in your growth, and thus your valuation has increased
Speaker 1: because you are more stable and you're on a better
Speaker 1: footing for reaching profitability or eventually going public. As we said,
Speaker 1: profitability kind of doesn't matter, it's kind of crazy, but
Speaker 1: profitability in the view of investors, as in they're getting
Speaker 1: a return on their investment. So that can also include
Speaker 1: things like if you're able to show that you have
Speaker 1: a really strong path toward generating revenue and scaling up
Speaker 1: the business, that is incredibly valuable, enormously valuable, and a
Speaker 1: lot of startups fail to ever reach that because scaling
Speaker 1: is hard. Now, the goal of the investor is pretty simple,
Speaker 1: to get a return on their investment, preferably a nice, big,
Speaker 1: fat return. The goal of the startup that depends. There
Speaker 1: are a few potential outcomes for startups, and depending upon
Speaker 1: what the founders want, some of them may be desirable
Speaker 1: and some of them may not be. All of them,
Speaker 1: assuming everything turns out well, means that they will be very,
Speaker 1: very wealthy. We're going to talk about those potential outcomes
Speaker 1: after we take another quick break. All right. Before the break,
Speaker 1: I mentioned that there are a few different potential outcomes
Speaker 1: that are hoped for among startups in general and unicorns
Speaker 1: in particular, and they're pretty easy to understand. One, as
Speaker 1: I've mentioned before, is for the company to ultimately go public,
Speaker 1: to become a publicly traded company. Usually this is managed
Speaker 1: by having an initial public offering or IPO. There's a
Speaker 1: whole process involved in that, and obviously it's not just
Speaker 1: for the tech sector. It's for any company that's going public.
Speaker 1: But the goal here is to offer shares of the company,
Speaker 1: shares of ownership up for sale on the stock market,
Speaker 1: and this will end up creating a big in jecttion
Speaker 1: of capital which the business can then use toward, you know,
Speaker 1: increasing the size of the business, expanding business in various ways,
Speaker 1: business e business stuff. So it's all about growth really.
Speaker 1: It does, however, mean also that the leadership and the
Speaker 1: investors are seeding some control of this business to the shareholders.
Speaker 1: Like when you own a share in a company, you
Speaker 1: also technically have a say in how that company is run. Now, obviously,
Speaker 1: if you only have a share and there are millions
Speaker 1: of shares out there, your voice is a tiny one
Speaker 1: and it's only through big collections that you can really
Speaker 1: make any kind of movement. But there are groups that
Speaker 1: form together to do just that. And they're also like
Speaker 1: activist investors who will invest very heavily in a company
Speaker 1: so that they have you know, a significant ownership, maybe
Speaker 1: not you know, enough to rank a whole percent even,
Speaker 1: but significant enough for them to be a voice that
Speaker 1: is impossible to ignore. And that means that you know,
Speaker 1: you're not making all of your own decisions. Some of
Speaker 1: those decisions are subject to the whim of the shareholders.
Speaker 1: It gets a little more complicated than that, but you
Speaker 1: get the basic idea, But there's no rule that says
Speaker 1: a startup, even a unicorn, has to go public. It doesn't,
Speaker 1: It could remain a private company. The issue with that, however,
Speaker 1: is that private companies don't have a way to generate
Speaker 1: this enormous influx of capital the way a publicly traded
Speaker 1: company does with an IPO, So it is very difficult
Speaker 1: to get the capital together to do things like expand
Speaker 1: the business and to scale up, and it might mean
Speaker 1: having to get more investments, which you know that can
Speaker 1: end up being a law term challenge, or relying upon
Speaker 1: the company's own profitability where you're pouring the profits back
Speaker 1: into the company itself, or to grow the business. But
Speaker 1: that can be much much much slower than holding an IPO.
Speaker 1: Even in publicly traded companies, growth isn't always enough. It's
Speaker 1: not enough for a company to grow from quarter to quarter.
Speaker 1: The rate of growth becomes important. Shareholders want to see
Speaker 1: a company grow faster this quarter than it grew last quarter,
Speaker 1: So the rate of growth is important, not just that
Speaker 1: the company grew, but how fast did it grow. It's
Speaker 1: wild to me that it could be a case where
Speaker 1: you might say, oh, this company didn't grow as much
Speaker 1: as we hoped it would, and therefore we've lost confidence
Speaker 1: in it. It's crazy to me that that's a thing,
Speaker 1: because the company still grew, it just maybe didn't grow
Speaker 1: as fast as you liked. So like sometimes you'll see
Speaker 1: headlines about a company reporting a decline in growth but
Speaker 1: still growing. It's just not growing as quickly as it
Speaker 1: was previously, and yet that can be seen as this
Speaker 1: terrible sign. And I think personally this focus on growth
Speaker 1: has been incredibly unhealthy for companies in general and for
Speaker 1: society as a whole. I just don't think it's the
Speaker 1: right philosophy. It's very difficult to sustain, and it drives
Speaker 1: a lot of bad decisions. I would say, but that's
Speaker 1: again I'm getting off topic. I apologize so anyway that
Speaker 1: even with public companies or private companies, growth is always
Speaker 1: a concern, and it's harder to do when you're a
Speaker 1: private company. Sometimes there is a third option. You don't
Speaker 1: have to go public, and you don't have to stay private.
Speaker 1: The third option is he finds yourself a sugar daddy.
Speaker 1: By that, I mean you find a bigger company that
Speaker 1: wants to acquire your startup. This is kind of it
Speaker 1: almost became a joke that people were going out and
Speaker 1: founding startups just in the hopes that a bigger company
Speaker 1: would come along and spend a ridiculous amount of money
Speaker 1: to acquire the startup. And you don't have to worry
Speaker 1: about whether or not your business is profitable, like that
Speaker 1: never even becomes a concern. All you have to do
Speaker 1: is create an organization that seems desirable for some reason
Speaker 1: and then sign on the deadline and accept the big
Speaker 1: old checks. And you didn't have to do something as
Speaker 1: complicated as running a business and making it successful. There's
Speaker 1: a bit of there's a bit of truth to that,
Speaker 1: but that's obviously an oversimplification and almost a parody of
Speaker 1: what's actually happening. So what is going on here, Well,
Speaker 1: maybe the bigger company is looking at the startup as
Speaker 1: a potential rival further in the future, and so the
Speaker 1: bigger company wants to buy the smaller company before the
Speaker 1: smaller company a company becomes a competitor. You can look
Speaker 1: at Meta slash Facebook. That company has done this a lot,
Speaker 1: purchasing companies that either we're already starting to compete with
Speaker 1: Facebook's attempt to dominate online attention, or we're rising up rapidly,
Speaker 1: and then Meta swoops in purchases the company for some
Speaker 1: ridiculously high cost and then may or may not end
Speaker 1: up doing anything with it. Maybe the bigger company sees
Speaker 1: that there are bits and pieces of the startup that
Speaker 1: could be useful in the bigger company's own products, Like
Speaker 1: it's not that the startup itself represents something that the
Speaker 1: company wants, but rather the assets that the startup has.
Speaker 1: Some of those look really valuable, and maybe you incorporate
Speaker 1: those into your own stuff, and then maybe later on
Speaker 1: you even discontinue that stuff. I'm looking at you, Google,
Speaker 1: Google does this all the time. But it remains that
Speaker 1: sometimes the startup team is really just hoping to drive
Speaker 1: valuation up as quickly as possible and get some offers
Speaker 1: from bigger companies that can lead to a huge opportunity
Speaker 1: to cash out. This can go different ways, too, right Like,
Speaker 1: there are stories about startup founders who turned down fairly
Speaker 1: big offers to buy out their company because they say, oh,
Speaker 1: now this is undervaluing what we're going to do. And
Speaker 1: sure maybe right now, like as of right now, you
Speaker 1: know your your fifty million dollar offer is more than
Speaker 1: enough to cover all the assets that we currently own,
Speaker 1: but it doesn't cover the potential, and we would rather
Speaker 1: bank on our potential than cash out for fifty million.
Speaker 1: There are plenty of stories like that, but again, unicorns
Speaker 1: are rare, or at least they're supposed to be. Remember,
Speaker 1: like in twenty thirteen, when Aileen Lee first coined the
Speaker 1: term unicorn, her company estimated that there were fewer than
Speaker 1: forty companies that would merit unicorn status from two thousand
Speaker 1: and three. Within that decade, there were like thirty nine companies.
Speaker 1: But according to say CB Insights, as of July twenty
Speaker 1: twenty three, there were over twelve hundred unicorns in the world.
Speaker 1: And then not only that, you had variations that were
Speaker 1: even more kind of grandiose than unicorn. There's the deccacorn,
Speaker 1: that's a startup that hits a ten billion dollar valuation,
Speaker 1: or the Hectocorn, which is a hundred billion that's a
Speaker 1: lot of money. If you're wondering what companies were hitting
Speaker 1: more than one hundred billion in valuation, SpaceX would be one.
Speaker 1: Byte Edance, the parent company of TikTok is another. But yeah,
Speaker 1: there are lots of companies out there that are in
Speaker 1: the unicorn decacorn status a lot more than there were
Speaker 1: back in twenty thirteen, so it's not nearly as rare
Speaker 1: as it used to be. I mean, it's still not like,
Speaker 1: if you go out there and launch a startup today,
Speaker 1: you've got a real good chance of having a unicorn
Speaker 1: on your hands. It is not that common, right, It's
Speaker 1: still pretty darn rare. It's just way less rare than
Speaker 1: it was when Alienly coined the phrase back in twenty thirteen. Okay,
Speaker 1: that's it. That's what a unicorn is in the world
Speaker 1: of business, and the tech world in particular is known
Speaker 1: for these, So that's why I thought I would cover it.
Speaker 1: I hope you are all well, and I'll talk to
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